JUDGMENT Burnett or Grant (Respondent) v International Insurance Company of Hanover Ltd (Appellant) (Scotland)
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Easter Term
[2021] UKSC 12
On appeal from: [2019] CSIH 9
JUDGMENT
Burnett or Grant (Respondent) v International
Insurance Company of Hanover Ltd (Appellant)
(Scotland)
before
Lord Reed, President
Lord Briggs
Lord Hamblen
Lord Leggatt
Lord Burrows
JUDGMENT GIVEN ON
23 April 2021
Heard on 8 February 2021Appellant Respondent
Kenneth McBrearty QC Robert Milligan QC
Robin Cleland Robert Weir QC
James Hastie
(Instructed by Clyde & Co (Instructed by Lefevres
(Scotland) LLP (Edinburgh))
(Edinburgh))LORD HAMBLEN: (with whom Lord Reed, Lord Briggs, Lord Leggatt and
Lord Burrows agree)
Introduction
1. In the early hours of 9 August 2013, Craig Grant was killed as a result of an
assault on him by Jonas Marcius (the first defender), a door steward employed by
Prospect Security Ltd (the second defender) to work at the Tonik Bar in Aberdeen,
operated by its tenant, Blu Inns Ltd (the third defender).
2. The respondent (“Mrs Grant”) is Mr Grant’s widow. In March 2016 she
commenced proceedings claiming damages against the defenders as his widow and
in respect of their son, as qualifying relatives under the Damages (Scotland) Act
2011.
3. The appellant (the fourth defender) (“the insurer”) insured the second
defender under a policy covering, among other risks, public liability. The second
defender is in liquidation. Mrs Grant claims that the insurer would be liable to
indemnify the second defender in respect of its vicarious liability for the wrongful
acts of their employee, Mr Marcius, and that the right to be indemnified was
transferred to and vested in her under the Third Party (Rights against Insurers) Act
2010 (“the 2010 Act”).
4. The second defender did not enter appearance and Mrs Grant abandoned the
action against the first and third defenders, leaving in issue only her claim against
the insurer. That claim succeeded before the Lord Ordinary and the insurer’s
reclaiming motion (appeal) was refused by the First Division of the Inner House of
the Court of Session. The insurer now appeals to this court.
5. The central issue on the appeal is whether the insurer is entitled to rely on an
exclusion under the policy of “liability arising out of deliberate acts” of an
employee.
The background facts
6. The facts are taken from the Joint Minute of Admissions agreed for the
purpose of the proceedings below and the Statement of Facts agreed for this appeal.
Page 27. On the evening of 8 August 2013, Mr Grant went to the Tonik Bar in the
Galleria Shopping Mall in Aberdeen. He was intoxicated as the result of both alcohol
and cocaine and, having purchased a drink and taken it to a table, he fell asleep.
8. Mr Marcius woke Mr Grant up and, together with two other door stewards,
Mr Hauley and Mr Morley, ejected him from the premises. Once outside, Mr Grant
became involved in an altercation with the door stewards and hit out at Mr Hauley,
who responded by punching or attempting to punch him. Mr Morley telephoned the
police requesting their assistance. Mr Marcius took hold of Mr Grant around his
shoulder or neck and he was wrestled to the ground. He applied a neck hold on Mr
Grant and the other door stewards assisted in restraining him. The neck hold was
applied for up to three minutes, and Mr Marcius was seen to lean on Mr Grant with
all of his weight and put as much pressure on his windpipe as possible. Mr Grant
continued to resist by kicking out for a short period of time, but he was then seen to
turn blue and began to choke and cough. On the arrival of the police at the scene,
Mr Grant was motionless and was pronounced dead shortly afterwards. The cause
of death was mechanical asphyxia, caused by the application of the neck hold by Mr
Marcius.
9. Mr Marcius stood trial at the High Court in Aberdeen for the murder of Mr
Grant. Evidence was led at trial to the effect that Mr Marcius had undergone training
in minimising conflict, avoiding violence and on acceptable methods of restraint;
that the neck hold applied to Mr Grant was not taught as an acceptable method of
restraint; that such a neck hold is considered so dangerous that it is not demonstrated
in a classroom setting; and that in applying the neck hold, Mr Marcius ignored his
training. The jury did not accept that Mr Marcius had asphyxiated Mr Grant or
caused his death and he was only convicted of assaulting Mr Grant, by seizing him
on the neck, forcing him to the ground, placing him in a neck hold and restricting
his breathing. The trial judge, Lady Wolffe, accepted that Mr Marcius’ actions were
badly executed, not badly motivated. A non-custodial sentence was imposed
consisting of a Community Payback Order with an unpaid work requirement of 250
hours.
10. It is agreed that Mr Marcius did not intend to kill Mr Grant.
The policy
11. The second defender was insured by the insurer under a one-year policy
which commenced on 27 November 2012 (“the policy”). Cover was provided under
eight different sections: Public/Products Liability; Inefficacy and Contractual
Liability; Products Inefficacy; Wrongful Arrest; Loss of Keys; Financial Loss;
Page 3Employers Liability, and Fidelity Guarantee. Each section had its own excess and
limit of liability.
12. The policy describes the second defender’s business as being “Manned
Guarding and Door Security Contractors”. The annual premium is £2,875.55. The
number of “door supervisor” employees is recorded as 57, with annual wages
totalling £287,438.
13. In respect of public liability, the policy coverage is stated in the following
terms:
“The INSURERS will indemnify the INSURED against all
sums which the INSURED shall become legally liable to pay
as compensatory damages and claimant’s costs and expenses
arising out of accidental
(a) INJURY to any person
(b) physical loss of or physical damage to material
property
(c) obstruction trespass nuisance or interference
with any right of way light air or water …”
14. “INJURY” is defined as “bodily injury death illness disease or shock causing
bodily injury”.
15. There are a number of policy exclusions. Clause 14, so far as relevant,
provides:
“DELIBERATE ACTS
Liability arising out of deliberate acts wilful default or neglect
by the INSURED any DIRECTOR PARTNER or
EMPLOYEE of the INSURED other than as set out in
Extension 1 (if such Extension is operative) and Extension 2 (if
such Extension is operative).”
Page 416. Extension 1 relates to Efficacy and Contractual Liability and Extension 2 to
Products Efficacy.
17. Liability arising from or out of wrongful arrest is excluded by clause 20, but
is then included by extension 3 which, so far as relevant, provides:
“All the Extensions are subject to all other terms conditions and
Exclusions of the Policy
3 WRONGFUL ARREST
The INSURERS will indemnify the INSURED in respect of all
sums which the INSURED shall become legally liable to pay
as compensatory damages arising from or out of WRONGFUL
ARREST committed or alleged to have been committed by the
INSURED any DIRECTOR PARTNER or EMPLOYEE of the
INSURED …”
18. Wrongful arrest is defined as:
“any unlawful physical restraint by one person on the liberty of
another and includes:
(1) assault and battery committed or alleged to have
been committed at the time of making or attempting to
make an arrest or in resisting an overt attempt to escape
by a person under arrest before such person has been or
could be placed in the custody of the police or an officer
of the court …”
19. The Schedule to the policy provides that the limit of liability in respect of
public liability is £5m, while that for wrongful arrest is £100,000.
20. The policy is governed by English law. It has not been suggested that there
is any difference between Scottish law and English law in relation to the issues on
the appeal.
Page 5The proceedings below
21. The proceedings will be described using Scottish law terminology with the
English law equivalent in brackets.
22. The insurer sought absolvitor (dismissal) on the basis that it was not liable to
indemnify the second defender under the policy as Mr Marcius’ actions fell within
the clause 14 exception of “deliberate acts”. In the alternative, it was argued that, if
it was obliged to indemnify, its liability was limited to £100,000 as Mr Marcius’
actions fell within the definition of “Wrongful Arrest”.
23. The action proceeded to a Proof before Answer (trial with questions of law
reserved for determination) before the Lord Ordinary (Lord Uist). The parties
produced a Joint Minute of Admissions setting out the relevant evidence which was
agreed. On 5 April 2018, the Lord Ordinary issued an opinion (judgment) in which
he concluded that the insurer was obliged to indemnify the second defender in
respect of their liability to the pursuer (claimant) arising out of the death of Mr Grant
and that the second defenders’ right to indemnity had been transferred to and vested
in the pursuer (the claimant - Mrs Grant) under sections 1 and 3 of the 2010 Act.
Decree of declarator (a declaration) was granted to that effect in terms of the
pursuer’s first conclusion (remedy sought in the pleadings).
24. The Lord Ordinary held that the clause 14 exclusion “applies only when the
outcome giving rise to liability, namely death, was the intended objective”. There
was no such intention, nor was it pleaded and so the exclusion did not apply. He also
held that the wrongful arrest extension was irrelevant as no such action had been
brought.
25. The appellant reclaimed (appealed) the interlocutor (order) of the Lord
Ordinary. The reclaiming motion (appeal) was heard by the First Division of the
Inner House (The Lord President (Lord Carloway), Lord Brodie and Lord
Drummond Young) on 31 October 2018. On 22 February 2019, the First Division
refused (dismissed) the reclaiming motion. All three of their lordships gave opinions
(judgments).
26. In relation to the proper construction of the clause 14 exclusion, The Lord
President, Lord Carloway, held as follows at para 23:
“… the phrase ‘deliberate acts’ in the policy is intended to
cover acts which involve the insured, or his employees, doing
something with the deliberate intention of bringing about a
Page 6particular objective, notably the creation of liabilities for losses
covered by the policy. Seen in this light, the exclusionary
phrase does not cover a deliberate act of an employee, intended
as one of restraint, which ‘accidentally’ causes injury or death
to the person restrained. For the exclusion to operate, the
employee must have deliberately intended to cause the death
of, or at least serious injury to, the deceased. That is not the
situation in this case.”
Lord Brodie agreed with this construction, observing at para 53 that:
“… It appears to me that that construction gives full weight to
the ordinary meaning of the various words in the expression
‘liability arising out of deliberate acts’. It avoids absurdity
without the need to read in words which do not appear in the
text. It is commercially sensible in that it provides cover against
risks incidental to the insured’s business while being consistent
with ‘a basic rule of insurance law’, namely, ‘that a contract of
insurance does not cover an assured against his deliberate or
wilful infliction of loss, at any rate in the absence of express
stipulate or necessary implication’: Charlton v Fisher [2002]
QB 578, para 51 ...”
Lord Drummond Young held as follows at para 63:
“… In my opinion the application of exclusion 14 should be
confined to cases of that nature, where there is a deliberate
decision to use excessive force to cause injury. Exclusion 14 is
not intended to deal with the case where a door steward
attempts to restrain a customer or would-be customer but in
doing so negligently, or even recklessly, goes beyond a
reasonable level of force. The use of the word ‘deliberate’ in
the exclusion indicates that the employee’s act should be
intended to cause the type of harm suffered by the victim. Even
if that harm results from a deliberate act of the employee, such
as punch or choke hold, unless the harm suffered was of the
general nature intended by the employee, it cannot be said that
the liability for that harm arose out of the ‘deliberate’ act of the
employee.”
27. All three of their lordships held that there had been no deliberate act on the
facts. They also all held the wrongful arrest extension to be inapplicable.
Page 7The Issues
28. The issues on the appeal are as follows:
(1) Was the death of Mr Grant brought about by a deliberate act of Mr
Marcius within the terms of clause 14 of the policy, with the effect that the
insurer’s liability to indemnify Mrs Grant is excluded?
(2) Was the death of Mr Grant brought about by Mr Marcius’ wrongful
arrest of him under the terms of Extension 3 of the policy, with the effect that
the insurer’s liability to indemnify Mrs Grant is limited to £100,000?
Issue (1) - Was the death of Mr Grant brought about by a deliberate act of Mr
Marcius within the terms of clause 14 of the policy?
Principles of interpretation
29. The parties were agreed that the policy, like any other contract, is to be
interpreted in accordance with the principles discussed and set out by Lord Hodge
in Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173, paras
10-13. The policy is to be interpreted objectively by asking what a reasonable
person, with all the background knowledge which would reasonably have been
available to the parties when they entered into the contract, would have understood
the language of the contract to mean. This involves a consideration of the words
used in their documentary, factual and commercial context. This approach applies
equally to exclusion clauses. The doctrine of interpretation contra proferentem is
only relevant in a case of genuine ambiguity or real doubt as to the meaning of the
words used - see Impact Funding Solutions Ltd v Barrington Support Services Ltd
[2016] UKSC 57; [2017] AC 73, paras 6-7 per Lord Hodge.
The context
30. The scope of an insuring clause in a public liability policy covering
“accidental” injury was considered in the Court of Appeal decision in Hawley v
Luminar Leisure Ltd [2006] EWCA Civ 18; [2006] PIQR P17, a case involving
similar facts. It concerned a nightclub doorman who had punched the claimant,
causing him to fall, fracture his skull and suffer permanent serious brain damage.
The doorman was convicted of causing grievous bodily harm. The issue under the
public liability policy of the doorman’s employer was whether the liability arose
from “accidental bodily injury to any person”. The court held that it did because
Page 8whether the injury was “accidental” was to be considered from the perspective of
the assured - ie the employer rather than the doorman. It follows that, leaving aside
the clause 14 exclusion, the policy in this case would cover deliberate acts by an
employee which were “accidental” from the perspective of his or her employer.
31. Another relevant aspect of context is that the policy is provided in respect of
the second defender’s business of “Manned Guarding and Door Security
Contractors”. There is a clear risk that door stewards will use a degree of force in
carrying out their duties and that vicarious liability for their tortious acts may result.
That is a public liability which is inherently likely to arise in connection with such
a business. As observed in Hawley at para 108: “one of the most fundamental
concepts underlying the policy was that the insured would be covered for damages
which it had to pay owing to its vicarious liability for its employees’ torts. Thus, it
can be said with real force that one would not expect the underwriters to be able to
invoke [the employer’s] vicarious liability for its doormen as a ground for avoiding,
as opposed to accepting, liability under the policy.” This was a contextual matter
stressed by all three members of the First Division - Lord Carloway at para 19; Lord
Brodie at para 51 and Lord Drummond Young at para 62. As Lord Carloway stated
at para 19:
“Although some purely accidental incidents might occur as a
result of carelessness, the public liability cover which would
obviously be required was that which would deal with incidents
at the doors of bars. These would commonly involve acts
preventing persons entering, or removing them from, the
premises; all of which would be almost bound to involve
deliberate physical acts of one kind or another.”
32. The insurer accepts that this is a relevant part of the context and that vicarious
liability for negligent acts of door stewards which cause injury would be covered,
since otherwise the policy would be stripped of much of its content. It submits that
it does not follow, however, that there should be or is coverage for all injuries
deliberately inflicted by door staff.
33. The insurer also accepts that, since negligence is covered, “deliberate acts”
cannot simply mean any act which the door steward intended to carry out. Many
negligent acts will be deliberately carried out in the sense that a person intended
them, albeit they may not have intended the consequences of those acts. In this case,
for example, Mr Marcius clearly intended to apply the neck hold, but it is accepted
by the insurer that that is not the relevant “act”.
Page 934. Against that background, the critical issue dividing the parties is what is
meant by “deliberate acts”. The insurer’s case is that it means acts which are
intended to cause injury, or acts which are carried out recklessly as to whether they
will cause injury. Mrs Grant’s case is that it means acts which are intended to cause
the specific injury which results, in this case death, or at least serious injury, but that
on any view it does not include reckless acts.
Intention to injure
35. In the present case we are concerned with liability for “injury” arising out of
“deliberate acts”. If, as is common ground, it is not the act which gives rise to the
injury that has to be deliberate, the most natural interpretation of the clause is that it
is the act of causing injury which must be deliberate.
36. The terms of the policy do not provide any support for an interpretation which
draws distinctions between different kinds of injury, or between serious and less
serious injuries. The insured peril is liability arising out of accidental “injury” and
this means all kinds of “bodily injury” without differentiation.
37. An interpretation that focuses on the specific injury intended also leads to
unsatisfactory and arbitrary results, such that it is most unlikely to reflect the parties’
intentions. For example, let it be supposed that a doorman punches a man in the face
with the intention of breaking his nose. If he succeeds in doing so the exclusion
applies. If, on the other hand, the man falls over and suffers more serious injury, as
in Hawley, the exclusion would be inapplicable. Equally, if he only succeeds in
inflicting a lesser injury, such as bruising, the exclusion would be inapplicable.
There is no commercial or other logic in excluding precision injuries in this way.
Why should the parties choose to make coverage depend on the happenstance of
whether a targeted injury does or does not result? This is largely a matter of chance.
There are, moreover, real difficulties in identifying and establishing the requisite
intention for these purposes. In many cases there will not be an intention to cause a
specific injury. A more rational and workable distinction might be between an
intention to cause really serious injury or a lesser injury, but there is no support in
the policy for drawing distinctions of this kind, and, in any event, it begs definitional
questions.
38. Some support can be found in the policy for the drawing of a distinction
between the different types of injury identified in the injury definition clause - ie
“bodily injury death illness disease or shock causing bodily injury”. Doing so,
however, still leads to difficulties and arbitrary results. For example, in relation to
shock causing bodily injury, is the requisite intention to cause shock causing the
specific injury which results, even though that injury may well be unforeseeable? In
Page 10relation to death, while one can well understand why the act of murder should be
excluded, if the relevant intent was to cause really serious injury rather than to kill
then the exclusion would not apply, even though under English law it would still be
murder. Equally, one can well understand why attempted murder should be
excluded, but since that requires an intention to kill but no resulting death, the
exclusion would not apply.
39. All these considerations provide strong support for the view that the relevant
intention relates to the liability covered under the policy, namely “injury”. The same
would apply to the other types of liability covered, such as for “physical damage”
or “nuisance”. The application of the exclusion does not depend on the particular
type or extent of damage or nuisance intended. As in the case of “injury”, it is
sufficient if the causing of the damage or nuisance was deliberate.
40. Robert Milligan QC for Mrs Grant submitted that the insurer’s interpretation
meant that the policy would lack meaningful and effective content. He pointed out
that it is in the nature of the door supervising business that door stewards will, on
occasion, find themselves on the wrong side of the line and incur a liability where
they have intended some minor injury, such as by gripping a customer’s shoulder
hard. The likely consequence is the exclusion of multiple liabilities arising through
the door stewards’ handling of customers.
41. In oral argument, Mr Milligan acknowledged that this submission is stronger
in relation to the suggested exclusion of reckless as well as intentional acts. While
physical handling of customers and the use of force may be a part of door
supervising, there is no necessity for that to involve an intention to injure. Moreover,
realistically, liability under the policy is only likely to arise where an injury of some
seriousness which is worth suing for has been suffered.
42. Mr Milligan also relied on the decision of the Supreme Court of South
Australia in Clayton v Mutual Community General Insurance Pty Ltd (1995) 64
SASR 353. In that case a house insurance policy included an exclusion of “loss or
damage caused by the deliberate or intentional acts committed by you”. The
claimant’s husband committed suicide by deliberately igniting petrol fumes in a
motor car, in the carport which formed part of the insured premises. The fire
destroyed the car, damaged the carport and spread to the house itself causing
extensive damage. The trial judge held that cover was excluded because the igniting
of the fumes resulting in fire was a deliberate and intentional act and it caused the
loss. This decision was reversed on appeal. The court held that the exclusion only
applied if there was intention to cause damage to the insured premises, which there
was not. Mr Milligan relied in particular on King CJ’s statement at para 13 that:
Page 11“I consider that the act contemplated by the phrase ‘deliberate
and intentional act’ is the act of causing the damage. There
must be a deliberate or intentional causing of the damage to the
insured premises.” (Emphasis added)
Just as the requisite intent in that case was the causing of “the” damage rather than
merely damage, so Mr Milligan submitted in this case it is the causing of “the” injury
rather than merely injury. Quite apart from the fact that the Clayton case involved a
different type of policy and different policy wording, however, Mr Milligan reads
far too much into this paragraph. In the context of a house insurance policy, it is
entirely understandable that the intent should relate to damage to the insured
premises rather than the act which gave rise to that damage or damage to any other
property. Equally, in the context of a policy covering public liability for “injury”, it
is understandable that the intention should relate to injury rather than the act which
gave rise to that injury, as the insurer accepts. Moreover, there was no suggestion in
the Clayton case that a distinction should be drawn between different types or extent
of damage to the insured premises.
43. Mr Milligan further submitted that it makes commercial sense and accords
with “social justice” for the insurance coverage of an employer of door stewards
under a public liability policy to match the scope of the employer’s vicarious liability
for his employee’s acts, which will generally include deliberate wrongdoing, unless
committed for personal reasons. It was not, however, suggested that there was any
regulatory requirement for there to be such insurance cover and whether or not that
was the coverage obtained by the second defender in this case must depend on the
wording in fact agreed rather than pre-supposition.
44. Finally, Mr Milligan had a fallback argument that the relevant “deliberate
act” was the neck hold committed with the intention to cause serious injury. It was
said that “liability arising out of deliberate acts” addresses acts which the employee
performs where the liability bears a relationship of proportionality to the employee’s
intention. Where the injury is death, the exclusion will only be triggered where the
intention is one to cause serious injury. It was not, however, explained how this
interpretation derives from the wording of the policy. The policy draws no
distinction between injuries of differing seriousness nor does it require or refer to
proportionality. Whilst one can understand an interpretation embracing an act
causing “injury” or an act causing the “injury”, there is simply no foundation in the
policy wording for it to embrace an act causing “serious injury”, an expression found
nowhere in the policy.
45. For all these reasons, I would accept the insurer’s argument that, in the
context of the present case, “deliberate acts” in clause 14 of the policy means acts
which are intended to cause injury.
Page 12Recklessness
46. Kenneth McBrearty QC for the insurer submitted that “deliberate”, which
qualifies “acts”, and “wilful”, which qualifies “neglect or default” should be
interpreted as synonymous. He suggested that “neglect or default” referred to
omissions and that the intention was to qualify both acts and omissions in the same
way. The language used simply reflected the fact that in normal usage “deliberate”
is the more natural adjective to describe a positive act, while “wilful” is more apt to
describe an omission. He then relied on authorities in which “wilful” has been held
to include recklessness to support a case that the same meaning should be given to
“deliberate” in the context of clause 14. Both should therefore be interpreted as
meaning an intention to cause injury, or recklessness as to whether injury will be
caused.
47. In support of his submission that “wilful” may include recklessness, Mr
McBrearty relied on the Court of Appeal’s decision in CP (a child) v Royal London
Mutual Insurance Co Ltd [2006] 1 CLC 576. That case concerned a fire which had
been started by an 11 year old boy who had set fire to paper in a den he had built in
the derelict part of a mill building. The fire caused extensive damage to the building
and the issue was whether the claim under an insurance policy for accidental damage
to property was excluded by an exemption from liability for claims and liabilities
arising from “wilful, malicious or criminal acts”. In considering the meaning of
“wilful” in the context of this clause in the policy, Tuckey LJ stated as follows at
para 16:
“Obviously if the act is deliberate and intended to cause
damage of the kind in question it will be within the exclusion.
It will be wilful, as the judge held, and might also be malicious
or criminal. But for an act to be wilful I do not think it is
necessary to go as far as this. It will be enough to show that the
insured was reckless as to the consequences of his act.
Recklessness has been variously defined but if someone does
something knowing that it is risky or not caring whether it is
risky or not he is acting recklessly. Put more precisely for
present purposes if the insured is aware that what he is about to
do risks damage of the kind which gives rise to the claim or
does not care whether there is such a risk or not, he will act
recklessly if he goes ahead and does it. I think such conduct
was intended to be included in the exclusion and I would equate
a reckless act with a wilful act for this purpose. This approach
focuses upon the state of the insured’s mind when he does the
act rather than its intended consequences. Defined in this way
the exclusion does not require the insured to intend to cause
damage of the kind in question.”
Page 1348. Mr McBrearty also relied on cases which have considered the meaning of
“wilful neglect or default” in other contexts. In re City Equitable Fire Insurance Co
Ltd [1925] 1 Ch 407 concerned whether company directors were excused from
liability for the consequences of a fellow director’s fraud by reason of a provision
in the articles of association under which they would only be so liable if the
director’s act or omissions occurred by or through their own wilful neglect or
default. At first instance, Romer J, whose decision was upheld by the Court of
Appeal, interpreted this provision as follows, at p 434:
“An act, or an omission to do an act, is wilful where the person
of whom we are speaking knows what he is doing and intends
to do what he is doing. But if that act or omission amounts to a
breach of his duty, and therefore to negligence, is the person
guilty of wilful negligence? In my opinion that question must
be answered in the negative unless he knows that he is
committing, and intends to commit, a breach of his duty, or is
recklessly careless in the sense of not caring whether his act or
omission is or is not a breach of duty.”
49. This dictum of Romer J was applied in a different context by Donaldson J in
Kenyon Son & Craven Ltd v Baxter Hoare & Co Ltd [1971] 1 Lloyd’s Rep 232, 236
(exclusion clause in a bailee warehouse company’s terms of business). Donaldson
J’s decision was followed by Bingham J in Swiss Bank Corpn v Brink’s-Mat Ltd
[1986] 2 Lloyd’s Rep 79, 93 (also a case involving an exclusion clause of a bailee
warehouse company).
50. While Mr McBrearty acknowledged that the context is different in the present
case, he submitted that the same interpretation of “wilful default or neglect” was
appropriate and that the same approach then logically applies to the interpretation of
“deliberate”.
51. I would reject the insurer’s case on a number of grounds.
52. First, the starting point is the natural meaning of “deliberate” acts. This
connotes consciously performing an act intending its consequences. It involves a
different state of mind to recklessness. For reasons already stated, the relevant act in
this case is that of causing injury, so its natural meaning in the present context is
carrying out an act intending to cause injury.
Page 1453. Secondly, while the natural meaning of wilful includes deliberate, wilful is
capable of having a wider meaning, depending on the context. This was a point made
by Tuckey LJ in the CP case at para 13:
“13. The legal dictionaries show that wilful is used in many
contexts. One can safely say that it always means deliberate
and that it will take any further meaning from the word or
words which it qualifies and its context but beyond that one
cannot go.”
54. Thirdly, as the City Equitable case illustrates and Romer J explains, one
context in which wilful may well have a wider meaning is where it relates to a breach
of duty. “Default or neglect” in clause 14 is apt to refer to a breach of duty rather
than merely omissions; indeed “default” must be so referring. This is the most
plausible explanation of the use of the adjective “wilful”. An “act” is not the
counterpart to a breach of duty and so there is no basis for Mr McBrearty’s
supposedly “logical” submission that “deliberate” and “wilful” must have the same
meaning.
55. Fourthly, Mr McBrearty has not been able to show us any case in which
“deliberate” has been held to include recklessness.
56. Fifthly, if, exceptionally if not uniquely, deliberate was intended to include
recklessness, one would expect it to be made clear what that means in this context.
As is well known, and the cases we have been referred to illustrate, recklessness
may be defined in various different ways and the policy provides no clue as to what
it should be taken to mean in relation to “deliberate acts”.
57. Sixthly, if, as the insurer contends, clause 14 excludes reckless acts causing
injury, it would seriously circumscribe the cover provided, for the reasons given by
Mr Milligan and by all three judges of the First Division. The consequence of
accepting the insurer’s argument that “acts” in clause 14 refers to the act of causing
injury, rather than the specific injury resulting, is that an exemption of reckless acts
would lead to a very wide and commercially unlikely exclusion, given the nature of
the second defender’s business.
Application of clause 14 to the facts
58. Mr McBrearty contended that the nature of the assault of which Mr Marcius
was convicted shows that it was carried out with intention to injure. He emphasised
in particular the manifestly dangerous nature of the neck hold; the length of time for
Page 15which it was applied; the weight and pressure exerted and its apparent effect on Mr
Grant. The difficulty for the insurer, however, is that there was no finding by the
courts below of intention to injure, or even of recklessness. It is not for the Supreme
Court to find facts.
59. The conviction for assault does not establish any intention beyond an
intention to perform the act of assault, namely the neck hold. This is clearly
explained in the case of Lord Advocate’s Reference (No 2 of 1992) 1993 JC 43. In
that case a man was charged with assault with intent to rob when he entered a shop
holding out an imitation gun and said words to the effect: “Get the money out of the
till and lay on the floor”. He claimed that this was a joke and the issue on appeal to
the High Court of Justiciary was whether this evidence was relevant to the necessary
intent for his actions to amount to an assault. It was held that it was not and that the
necessary intent was established by the fact that the act of assault was deliberate.
Lord Cowie stated at p 51B-D as follows:
“The point is a short one and it depends upon what is meant by
the words ‘evil intent’ insofar as they form an essential element
in the crime of assault. In my opinion the meaning of the words
in the context of this offence is not to be obtained from a wide
review of the circumstances surrounding the incident but is to
be derived directly from the quality of the act, in the first place,
and, in the second place, whether that act was committed
deliberately as opposed to carelessly, recklessly or negligently.
It is the quality of the act itself, assuming that there was no
justification for it, which must be considered in deciding
whether it was evil … Having established that the act is an evil
one, all that is then required to constitute the crime of assault is
that that act was done deliberately and not carelessly, recklessly
or negligently.”
Lord Sutherland’s judgment was to similar effect, stating at p 53A-B as follows:
“If … a person deliberately performs an act which would in
itself be criminal then both the actus reus and the mens rea
coexist and a crime has been committed. The pointing of a gun
at a shop assistant accompanied by words such as those used
by the pannel would undoubtedly constitute the actus reus of
the crime of assault and if these things are done deliberately
and intentionally, as they were done here, the mens rea is also,
in my opinion, established.”
Page 1660. Lady Wolffe’s sentencing remarks similarly provide no support for the
insurer’s case on intention to injure. To the contrary she found that: “It was said on
your behalf that what you did was badly executed, not badly motivated … I accept
what was said on your behalf in this regard.” This was consistent with the evidence
that Mr Marcius gave at his police interview, also referred to by Lady Wolffe, that
“you believed you were acting in defence of your fellow door stewards and to
minimise the danger you felt Mr Grant posed to others.”
61. Not only is there no express or implied finding of intention to injure, but Lady
Wolffe’s conclusion that what was done was not “badly motivated” is inconsistent
with there being such an intention.
62. It follows that the insurer is not able to establish that the clause 14 exception
applies on the facts as found.
63. For completeness, I would add that the same conclusion would follow even
if “deliberate acts” included recklessness. There is no finding of recklessness and as
Lord Carloway observed at para 24 in relation to Lady Wolffe’s sentencing remarks:
“The description of the first defender’s acts as badly executed,
rather than badly motivated points away from their amounting
to recklessness.”
Conclusion on Issue (1)
64. Although I accept the insurer’s argument that “deliberate acts” in clause 14
of the policy means an act carried out with an intention to injure, the insurer is unable
to establish that there was such an intention on the facts. I reject the argument that
“deliberate acts” includes recklessness and, if it did, that it would make any
difference on the facts as found. It follows that clause 14 does not apply.
Issue (2) - Was the death of Mr Grant brought about by Mr Marcius’
wrongful arrest of him under the terms of Extension 3 of the policy?
65. In light of my conclusion that clause 14 does not apply, the insurer has no
defence to the claim made under the main insuring clause and the appeal must
therefore be dismissed.
Page 1766. In these circumstances it is not necessary to determine whether a claim might
lie under Extension 3. I agree, however, with the reasoning and conclusion of the
First Division on this issue. In particular, the losses claimed do not relate to wrongful
arrest and the factual basis for such a claim is not made out.
Conclusion
67. For all the reasons outlined above I would dismiss the appeal.
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